Dubbed the Protecting America’s Pensions Act of 2002,
the bill goes further than Republican proposals introduced
in the House of Representatives and Senate. Unlike the
Republicans, Kennedy would, in principle, not allow
companies to offer company stock in their investment choice
line-up if the company also matches in company stock.

“The main reason why Enron workers lost more than a
billion dollars is that they were pressured by Enron
executives to put all their 401(k) money in company stock,”
Kennedy said at the introduction of the bill. “The
Administration’s pension proposals fail the test. It’s a
placebo plan that would not have prevented Enron workers
from losing everything. It does nothing to address the core
issue of employer pressure.”

Kennedy’s bill would:

allow companies to contribute corporate stock to
401(k) plans or offer their stock as an investment option
to plan participants – but not both, unless the company
also offered a “substantive defined benefit” plan

clarify that it is a violation of ERISA to give
misleading information or withhold material information
on company stock

allow the plan and participants to sue executives who
mislead workers or “harm workers retirement
security”

force executives to disclose their sales of company
stock

require workers and participants to be represented on
the retirement plan board of trustees

require 401(k) plans to permit participants to vote
the company stock held in their accounts

let employees sell matching stock after three
years

require plans to offer education on the benefits of
diversification and the risk of holding company
stock

require quarterly benefit statements, including the
percentage held in company stock

require companies to give workers 30 days
notice before a blackout period

require defined contribution plans to take out
insurance to cover participants in case of violations of
their rights, and direct the Pension Benefit Guaranty
Corporation to study insuring defined contribution
plans

require the Department of Labor to establish an
office of the Participant Advocate

The bill also gives workers greater access to investment
advice, as outlined in the Bingaman-Collins Independent
Investment Advice Act . It thus opposes the Retirement
Security Advice Act (HR 2269), introduced by John Boehner
(R-Ohio) and passed by the House last November with
Democratic support. The Senate has not acted on the bill
yet. The White House supports HR 2269.

Republican Reaction

Kennedy, chairman of the Senate Health, Education, Labor
and Pensions Committee, plans to move the bill through his
panel March 13, according to the Boston Globe.

Kennedy’s bill is expected to be the one Democrats in
the House and Senate will rally around, pitting it against
the Republican bills introduced by Boehner in the House and
Tim Hutchinson (R-Arkansas) in the Senate. The Republican
bills are modeled on Bush’s proposals.

In an early reaction, Boehner’s office expressed
satisfaction over the fact that the Democrats have moved in
the president’s direction. But Boehner took issue with
Kennedy’s support of the Bingaman advice bill.